Question #13-07: Ruling on exchanging and trading in currency?

Question:
What is the ruling on exchanging currency? Is the profit that results from selling one currency for another at the market price permissible?

Answer:

In the name of Allah, The All-Wise.

Trading in currencies  is permissible, subject to the condition that the exchange be completed in the same sitting as the contract. It is permissible to sell one currency for other, subject to the condition that the handover take place in the same sitting as the contract is made. So the profit that is made from this transaction is permissible. 

The dalil  is :the Prophet (peace and blessings of Allaah be upon him): “Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt, like for like, hand to hand. If the types are different then sell however you like, so long as it is hand to hand.” Narrated by Muslim, 1587.

In exchanges of currency it is essential that the exchange be completed in the same sitting as the contract is made. It is not permissible to hand over some straight away and delay some. It is proven that the Prophet (peace and blessings of Allaah be upon him) said: “If the types are different then sell however you like, so long as it is hand to hand.”

Allah knows best.

Shk. Mostafa

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